Put Your Internal Team on Bootstrap to Drive Innovation

MICHAEL GRABER & JOCELYN ATKINSON

In 1992, The American Heritage Dictionary acknowledged the popular use of a new word, “intrapreneur,” meaning “a person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation.” This term and concept is enjoying a revival as current companies struggle to realize growth and innovation. Companies seeking growth typically design programs that are based in strategy-driven or intrapreneur-driven innovation.

In its most idealistic form, intrapreneurism encourages employees to spend up to 15 percent of their time at work developing their own creative ideas for the betterment of the company. Google and 3M are leaders in this area – the Post-it Note a famous example of the latter’s success. Both companies’ employees choose their innovation activities, and receive little to no direction from upper management. This approach tries to replicate the entrepreneurial spirit of risk-taking and innovation in mature companies or corporations.

After 20 years of trial and error, best practices indicate that company culture is key to success. Studies and experts claim that intrapreneurship requires encouragement and support from senior management and job protection for the intrapreneur if new ideas fail.

This is why not all companies can replicate the success of Google and 3M. Google acquires entrepreneurial companies, puts golden handcuffs on company leaders with earn-outs to keep real entrepreneurs around. The amazing part is that they have created a habitat that is well suited to entrepreneurs and many stick around to help Google innovate after their earn out period expires.

The intrapreneur approach is highly nuanced and in most cases we have witnessed several downfalls: When everybody is responsible for innovation, ultimately nobody is responsible for innovation. Speed to market suffers because there is no real sense of urgency. Market validation and relevancy to strategy are often overlooked resulting in a weak pipeline. Time gets usurped by the daily fires. And resentment builds when time is limited or employees are assigned to innovation rather than recruited based on proclivity.

While idealistically touted as “free market entrepreneurship within the corporate organization” we argue that intrapreneurs and entrepreneurs are two different animals living in dramatically different environments. The entrepreneur truly operates in the free market evolving quickly to survive, while the intrapreneur works in a simulated reality without the pressures of survival.

The anecdote? We suggest that companies run their business like a venture capital firm. This general premise is not a new concept either but we have some new thoughts on how to make it more effective. The idea of internal corporate venture (ICV) started in the 70s and was followed by corporate venture capital (CVC), where corporations form funds and invest directly in external start-up companies. Stay tuned for next week’s column that will discuss corporate venture capital and open innovation. Here, we propose companies consider a hybrid model that blends ICV and CVC to take away some of the risk protection provided to the employee under the intrapreneur model. If you really want to move from basic product development to game changing innovation driven by the entrepreneurial spirit, stop coddling. Make your internal innovation teams, skunk works and intrapreneurs scrap out proof of concept. Make them write a business case or plan that will be considered against other corporate growth opportunities sourced internally or externally. In exchange for their work, give them some equity, seed capital and dedicate them to this new initiative.

Without skin in the game people can’t be expected to have a sense of urgency.